Tesla‘s Model 3 could save the electric-car maker from its recent financial woes, one analyst said Monday.

Alexander Haissl, an analyst for German investment bank Berenberg, says shares will hit $US500 – 80% above where the stock was set to open Monday – thanks to high profit margins on the Model 3 sedan.

“From production bottlenecks to quality issues, consensus has largely dismissed the prospect of 25% gross margin on the Model 3,” Haissl told clients. “But the widespread assumption that Model 3 margins can be directly inferred from Model S/X is inherently almost totally flawed.”

The Model 3 also reduces some fixed assembly costs from its predecessor the Model S that helps it get a leg up on traditional automakers, Haissl says.

“Premium content that comes as standard on the Model S lifts the cost per kg to 50% above premium OEMs,” Haissl wrote.

“On the Model 3, much of this content is eliminated or replaced by cheaper alternatives. For example, eliminating the dashboard, smart air suspension, all-wheel-drive and free supercharging, and substituting aluminium bodywork with steel, using a cheaper electric motor, less wiring and lower warranty provisions – plus other efficiencies – reduces material costs by about $US17,000 compared to the Model S.”